For Swisscom, Innovation Labs Can Identify What Digital Transformation Entails

Innovation labs expose the tactics for identifying and delivering solutions in the digital economy.

“Just because you can doesn’t mean that you should” is knowledge that often comes with time. Knowing what can versus what should be delivered is the value of experience and insight that a technology incubation team and lab offers when seeking transformation success in any area of the organization.

Speed and the pace of change in the digital economy continue to be daunting. Businesses don’t want to miss out on revenue opportunities and process innovations enabled by new technologies. Stephan Massalt, VP Cloud at Swisscom Cloud Labs Ltd. in Palo Alto, California knows that combating technological change which impacts business operations requires taking “a disruptive approach to helping Swisscom make the best decisions in its strategy and portfolio implementation, and influencing its technology roadmaps.”

Swisscom, Switzerland’s largest telecoms and integrated IT services provider with a sizeable client base in the financial sector, identified early on that the cloud would be an important underlying infrastructure. It showed potential for running core elements of its networks and enabling new telecom capabilities (such as Network Function Virtualization) and also for its growing IT customer base. The cloud’s infrastructure requirements appeared ideal for a company well-versed in building and maintaining large-scale telecommunication infrastructure. Becoming a cloud provider was therefore considered a logical step for Swisscom.

But with cloud, as with any other strategic development, the direction to take, or what it will really mean for the organization, may not always be obvious. IT today is consumed differently from five years ago. Predicting consumption five years into the future requires, as Massalt states, “asking tough questions of strategies that may not be realized for a number of years, when things might be different.”

In Massalt’s experience, de-risking technological advances to expose their business opportunities “enables a process of self-discovery and enlightenment to understand the practicalities of implementing technology models such as cloud.” This can be crucial, even for an enterprise with the engineering experience of building and operating large-scale IT and communication infrastructure and the technical capabilities for working with emerging technologies. Massalt highlights that “getting ahead of the market and the industry is not always enough unless it is in the right direction for our business and client base.”

Swisscom’s investment in a well-placed innovation scouting team in the heart of Silicon Valley helps it understand the impact on its business from new working concepts, customer consumption models and emerging innovations. This provides the foresight to understand the precise nature of changes and the actions needed, and coupled with clarity, realization and pragmatism make it a powerful agent for success.

When looking at cloud in particular, a litany of learnings came early to an organization with the DNA of building things at scale. One notable realization was that only the global cloud providers with large development resources are capable of delivering at a scale that is both affordable and fast. In addition, rapid and continuous delivery at the infrastructure level was found to require significant resources. Of greater value, Massalt believes, “is the ability to understand how a century plus old company with longstanding quality and delivery expectations can both differentiate from, and work with the new market players.”

Identifying what’s core to the business is essential, especially if initial investments go beyond the capabilities of suppliers and partners to provide supporting software, hardware and processes. As a result of pursuing cloud early, Swisscom found customer intimacy and “the ability to leverage third-party services and products to speed up the delivery of solutions” was more essential for keeping with customer cloud demands. It also opened up greater opportunities for the organization and was therefore core to the progression of the Swisscom business. In reality, many customers simply want to know how to develop cloud services, move to cloud-based infrastructure and operations and have the flexibility of adoption and integration.

While it was comfortable with building solutions at scale, a need for faster reaction times to problem resolution at Swisscom led it to focus on agile and DevOps. Agile and DevOps practices have become critical to doing business in the digital economy. However, what they entail can be a challenge for organizations to grasp. To Massalt, “Agile and DevOps practices are the enablers of greater collaboration between those that architect, build, engineer and operate applications and infrastructure.” Massalt further adds: “With our experiences we are advancing our capabilities in these areas to further improve our speed and responsiveness to customer requirements.”

The advantage of an early foray into cloud through the Swisscom Cloud Labs is allowing Massalt and his team to advise on smarter operational structures. While a project manager may transition well into the role of an agile scrum master, the customer needs to be involved early in the process. However, Massalt highlights “a product strategist is required to keep a check on the bigger product vision and business direction in the face of changing roadmaps and feature requests.” Developers may see their roles expand to take on more of the responsibilities for deploying and maintaining service functions and features. But as Massalt points out: “Infrastructure needs 24/7 support and is different from development, so it is unlikely to see developers also responsible for its upkeep and availability.”

Stability is required for the infrastructure core, but a higher cadence of change can be tolerated for functions, features and services. Massalt believes: “Agile needs the governance of the Scaled Agile Framework (SAFe) for meeting the promise of implementing features while adhering to the benefits of corporate planning”.

Although some might be skeptical as to the scale of business change and growth that can be achieved through an innovation incubation team, Massalt points to the advantages that the Swisscom Cloud Labs offers: “Some tough but pragmatic technology and operational decisions that are more in keeping with the goals of the Swisscom business and its future progression and the needs of its client base when it comes to cloud.” Applied correctly, a tech innovation lab provides an opportunity to realize new business models and work in a more flexible and opportunistic way with start-ups, partners and customers.

Swisscom Cloud Labs is providing significant support to the successful outcome of Swisscom’s digital transformation initiatives. Notably, it allows the company to focus on implementing technology it can buy, on top of which it can create the value that delivers the vision and expectations of its customers. One outcome of this is the ability to split between updating the base cloud infrastructure, which is done every three or four months, to offer a stable core while upgrading services and providing new features every two weeks. Importantly, there are processes in place that enable clients to test and transition to the latest updates at their own pace.

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